2013 Commercial Law Developments -- II. Real Property Secured Transactions
II. Real Property Secured Transactions

March 24, 2014

  • Joyce v. Fidelity Real Estate Growth Fund II, L.P., 2013 IL. App (1st) 121697, 2013 Ill. App. LEXIS 401 (Ill. App. 2013) -- A borrower defaulted on a loan and negotiated a forbearance agreement with the lender, pursuant to which the borrower delivered in escrow a deed in lieu of foreclosure. The forbearance agreement included a provision permitting the lender to accelerate the loan if the borrower failed to meet certain sales targets and the deficiencies were not cured within thirty days. The borrower failed to meet the sales goals and failed to cure the default within thirty days. The lender filed a deed in lieu of foreclosure and conveyed the property to its subsidiary. The borrower asserted it was not in default because it sold certain parking spaces allowing it to reach its sales goals, and, in the alternative, that a 1.5% shortfall was immaterial. The lender argued that the parking space sale was improperly characterized because it included an unreported debit to the purchasers account, and that the 1.5% shortfall was material because the forbearance agreement specified that any failure to meet sales goals would result in an event of default. The court held for the lender.

III. Guaranties / Table of Contents